Due to the blockade of Ukrainian sea ports, the EU remains the main export destination

The war became great challenge for Ukrainian economy. The hostilities created threat to the lives of people and the work of enterprises. Supply chain disruptions and logistical problems have led to lower production and exports, especially in iron and steel industry. In 8 months 2022 Ukrainian iron ore exports decreased by 32.8 y/y, pig iron exports – by 59.6% y/y, semis exports – by 66.7% y/y. Exports of flat products over the same period declined by 63.7% y/y and long products – by 67.3%.

Due to the blockade of Ukrainian sea ports, the EU became the main destination for exports of iron and steel products. Now the main way to deliver products is by rail. So, export capabilities are limited by border crossing capacities. In the EU the width of the railway track is 1435 mm, while in Ukraine it is 1520 mm. The total daily capacity of Ukrzaliznytsia and companies of neighboring countries to transfer rolling stock from 1,520 mm to 1,435 mm track gauge is 175 railcars. In fact, these are only three full-fledged trains with cargo.

Increasing production and exports is possible in case of ending active hostilities and resumption of seaports operations. The question was raised several times about the possible resumption of steel exports through seaports by expanding the “grain” agreement. However, the likelihood of such decision looks extremely uncertain now.